The Market Monetarist writes how a combination of luck and good policy saved Australia from recession.
Milton Friedman once said never to underestimate the importance of luck of nations. I believe that is very true and I think the same goes for central banks. Some nations came through the shock in 2008-9 much better than other nations and obviously better policy and particularly better monetary policy played a key role. However, luck certainly also played a role…..
via The “Export Price Norm” saved Australia from the Great Recession « The Market Monetarist.
He says RBA was lucky interest rates were high and that saved Australia from recession. I thought the RBA purposely raised interest rates to that level by the end of the gdp boom, despite criticism from John Hewson, Jerry Harvey, etc. We were lucky commodity prices had filled our coffers, but I don’t think our interest rates were mysteriously and luckily higher than the rest of the world at the end of that commodity boom. China and Australia were partly prepared for the great recession, unlike the rest of the world whose interest rates were low at the end of a boom, due to clearly non-independent reserve banks.
PJA